Sensex up nearly 12% from recent low

The key benchmark indices pared gains after hitting their highest level in more than a month on concerns a glut in share sales may soak available liquidity in the secondary market. The BSE 30-share Sensex rose 67.87 points or 0.4%, off close to 95 points from the day's high and up close to 70 points from the day's low. The Sensex and the 50-unit S&P CNX Nifty today, 25 November 2009, struck their highest closing levels in more than a month.

Index heavyweight Reliance Industries rose today after the firm reopened retail fuel outlets. Banking and FMCG stocks gained. But realty stocks fell. The market breadth turned weak, easing from a strong breadth in early trade.

The market recovered after falling into the red for a brief period in early trade. The market extended gains later. The market pared gains after hitting a one-month high in afternoon trade. Market pared gains from the day's high in mid-afternoon trade. The market may remain on Thursday, 26 November 2009, as traders roll over positions in the derivative segment from November 2009 series to December 2009 series ahead of the expiry of the near-month November 2009 contracts on Thursday.

Rollover in Nifty futures was about 54% at the end of Tuesday's (24 November 2009) trading. Rollover in Min Nifty futures was about 33%. The market wide rollover was about 48%. In individual stocks, Hindustan Unilever, Maruti Suzuki, Power Grid Corporation, Reliance Power and Bharat Heavy Electricals (Bhel), have witnessed high rollover

Concerns that a glut in share sales may suck liquidity from the secondary market pulled the market off the higher level. Morgan Stanley expects Indian firms to raise roughly $70 billion through share sales over the next three years, Morgan Stanley's India country head Narayan Ramachandran said at an investment summit on Wednesday, 25 November 2009. Stake sales in state-run firms will account for $10-$15 billion of that, Ramachandran said. The upcoming auction of third-generation mobile spectrum will also spur potentially billions of dollars in equity raising, although not necessarily from the public markets, he said.

Indian companies have raised about $18 billion in equity thus far this year to repay high-cost debt or to fund expansion plans. Last year, Indian firms raised $7.2 billion in equity.

Meanwhile, the finance ministry on Tuesday constituted a working group to suggest ways of rationalising existing regulations relating to foreign portfolio investments, in order to encourage foreign investment into the country. The group will review the legal and regulatory framework to simplify rules related to overseas investment in the form of foreign institutional investment (FII), foreign venture capital investment (FVCI), private equity and NRI investment, according to notification issued by the finance ministry

The panel will further study arrangements relating to use of participatory notes (PN) and suggest any changes required to increase transparency. The review of the way PNs are being used is to ensure appropriate know-your-client (KYC) norms are in place. This, however, is unlikely to lead to any fresh restrictions on PNs, reports suggest.

The committee, which will submit its report within four months, will identify challenges in meeting the financing needs of the lndian economy through the foreign investment. It will suggest specific short, medium and long term legal, regulatory and other policy changes.

The group will further revisit the role of transaction taxes. Capital market transactions are subject to Securities Transaction Tax (STT) and also a 15% short-term capital gains tax. There is debate in the policy establishment as to whether the STT should be continued and whether ordinary income and capital gains need to be taxed at different rates.

The government can absorb nearly $100 billion of dollars in capital inflows, nearly double what is expected this year, before it needs to take strong restrictive measures, C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council said on Tuesday.

Brazil and Taiwan have taken steps to curb hot money inflows, and other governments are keeping a watchful eye on inflows, wary that they could fuel asset price bubbles. The IMF's chief economist on Monday warned of bubbles in emerging markets on uncontrolable capital movements, which was echoed by the Asian Development Bank on Tuesday.

Trade minister Anand Sharma said on Wednesday that the government has no plan to further liberalise foreign investment in retail sector. India, currently, does not permit foreign direct investment (FDI) in multiple-brand retailers, restricting global firms like Wal-Mart Stores and Carrefour from selling directly to customers in the country. Foreign holding in single-branded retailers is capped at 51 %.

US President Barack Obama sought to reassure Prime Minister Manmohan Singh on Tuesday of his commitment to boosting US ties with India even as his administration has set India's rivals, China and Pakistan, as key priorities. Obama and Singh told a joint news conference they were committed to completing a 2005 civil nuclear agreement that would open up India's potential $150 billion market in power plants.

The United States and India will establish a new economic partnership which US Treasury Secretary Timothy Geithner will help formally launch in India early next year, the White House said on Tuesday. The new partnership aims to strengthen economic ties between the two nations and echoes the strategic economic dialogue Washington established with China in 2006.

European shares rose on Wednesday after losses in the previous session, as a revised US growth forecast for 2010 by the Federal Reserve boosted stocks, with miners featuring among the top gainers. The key benchmark indices in France, Germany and UK rose by between 0.52% to 0.66%.

The European Central Bank (ECB) has been able to prevent deflation in Europe due to its 'solid anchoring' of expectations on price stability, ECB President Jean-Claude Trichet said on Wednesday. Trichet also said that economic improvement has not been rapid, when considering unemployment data.

The UK economy contracted slightly less than initially estimated in the third quarter, official figures showed Wednesday. Gross domestic product in the third quarter contracted 0.3% from the second quarter and was 5.1% weaker than in the third quarter of last year, the Office for National Statistics said.

Asian markets rose on Wednesday on expectations for stronger economic growth. The key benchmark indices in Hong Kong, China, Japan, Singapore, South Korea and Taiwan rose by between 0.34% to 2.07%. But, Indonesia's Jakarta Composite fell 0.42%.

Japan's exports fell at the slowest pace in a year in October 2009. Shipments abroad slid 23.2% from a year earlier in October, compared with a 30.6% decline in September, the Finance Ministry said today in Tokyo.

Bank of Japan Deputy Governor Hirohide Yamaguchi said on Wednesday that the world economy is recovering after a sharp downturn but has yet to fully emerge from the aftermath of the global financial crisis.

Trading in US index futures indicated Dow could gain 43 points at the opening bell on Wednesday, 25 November 2009.

US markets declined but ended off their lows on Tuesday after the Federal Reserve raised its forecast for 2010. Fed minutes indicated that Federal Reserve officials are confident the US economic recovery will be durable, but do not see employment or inflation picking up soon. The Dow was down 17.24 points, or 0.2%, to 10,433.71. The S&P 500 index slipped 0.59 points, or 0.1%, to 1,105.65, while the Nasdaq composite index fell 6.83 points, or 0.3%, to 2,169.18. Earlier, the Dow was down nearly 100 points after a report showed the economy grew less than expected in the third quarter and HP issued a cautious outlook.

In US economic news, Q3 GDP was revised to a 2.8% growth rate, lower than the initial reading of 3.5%. In other data, the conference board's gauge of consumer confidence rose to 49.5 in November 2009 from 48.7 in October 2009. And home prices improved for a fifth straight month in September 2009.

The Fed projected the economy will shrink 0.1% to 0.4% this year and grow by 2.5% to 3.3% in 2010. That compares to June's prediction of a contraction of 1% to 1.5% in 2009 and a gain of 2.1% to 3.3% next year.

Swift interest rate hikes aimed at containing inflation in product and asset prices could cause another downturn in the slowly recovering economies of the United States and Europe, the head of the World Bank Robert Zoellick said.

The BSE 30-share Sensex rose 67.87 points or 0.4% to 17198.95, its highest closing since 20 October 2009. The Sensex rose 159.40 points at the day's high of 17290.48, in afternoon trade. The Sensex fell 6.93 points at the day's low of 17,124.15 in early trade.

The S&P CNX Nifty rose 17.60 points or 0.35% to 5,108.15, its highest closing since 20 October 2009 . Nifty November 2009 futures were at 5,112.20, at a premium of 4.05 points as compared to spot closing of 5,108.15. Turnover in NSE's futures & options (F&O) segment rose to Rs 91,235.90 crore from Rs 91,101.55 crore on Tuesday, 24 November 2009. It hit a high of 5,138.

BSE clocked a turnover of Rs 4742 crore, lower than Rs 4780.35 crore on Tuesday, 24 November 2009.

The market breadth, indicating the overall health of the market turned negative compared to strong breadth in early trade. On BSE, 1290 shares advanced as compared with 1486 that declined. A total of 74 shares remained unchanged.

From the 30 share Sensex pack, 17 rose and rest fell.

A deluge of global liquidity has boosted stocks across the globe this year. Governments and central banks around the world have injected trillions of dollars in the past one year to pull the world out of a most severe recession since the 1930s Great Depression. The Sensex is up 7551.64 points or 78.27% in calendar year 2009, as on 25 November 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 9038.55 points or 110.76% as on 25 November 2009. From the recent low of 15404.94 on 3 November 2009, the Sensex had jumped 1,794.01 points or 11.64% at current 17,198.95.

Coming back to today's trade, the BSE Mid-Cap index fell 0.12% and the BSE Small-cap index fell 0.16%. Both the indices underperformed the Sensex.

The BSE FMCG index (up 1.44%),the BSE Oil & Gas index (up 1.09%), the BSE PSU index (up 0.7%), the BSE Bankex (up 0.51%), the BSE Capital Goods index (up 0.5%) outperformed the Sensex.

The BSE Realty index (down 2.93%), the BSE Healthcare index (down 0.49%), the BSE Consumer Durables index (down 0.12%), the BSE Teck index (down 0.03%), the BSE Metal index (up 0.03%), the BSE Power index (up 0.07%), the BSE Auto index (up 0.37%), the BSE IT index (up 0.16%) underperformed the Sensex.

Energy major Reliance Industries (RIL) rose 0.81% to Rs 2193.75. But the stock came off the day's high of Rs 2225.90. RIL has reportedly reopened 900 gas stations, which were shut down when state-run oil marketing firms were selling heavily subsidised fuel. RIL has revived more than half its network of petrol pumps that were shut.

As per recent reports, the Securities and Exchange Board of India (Sebi) has asked Reliance Industries (RIL) why the company should not be barred from accessing the stock markets under rules governing fraudulent and unfair trade practices. The amendment (dated 8 October 2009) to the original show cause notice issued in April 2009 by the regulator's investigation department further asks why directions should not be issued to bar the company from buying, selling and dealing in any security, directly or indirectly. The notice was issued in the matter relating to alleged insider trading in the shares of the now-defunct Reliance Petroleum, which had since merged with RIL.

RIL on Sunday, 22 November 2009, said it has put a bid to acquire bankrupt chemicals maker LyondellBasell Industries. RIL said that it had submitted a preliminary non-binding offer to acquire, for cash, a controlling interest in Rotterdam, Netherlands-based LyondellBasell.

RIL also said it is "reviewing a number of global opportunities for growth in its core business," including LyondellBasell. The conglomerate said its offer is "preliminary and subject to customary conditions, including conduct of due diligence, documentation and receipt of creditor support."

Meanwhile, RIL plans an aggressive exploration campaign, investments in petrochemicals and overseas acquisitions as India's top company by market capitalisation prepares itself for the next phase of growth. The company will work towards attaining global scale for its conventional energy platform petrochemicals, refining and oil and gas exploration and invest in its new businesses such as retailing and alternative energy, chairman Mukesh Ambani said at the company's annual meeting of shareholders on 17 November 2009.

RIL has set 27 November 2009 as the record date for a liberal 1:1 bonus share issue.

Shares of public sector oil marketing companies jumped as lower crude oil prices will reduce under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. Indian Oil Corporation BPCL and HPCL rose by between 2.59% to 6.88%. Crude-oil futures ended at a one-month low on Tuesday as the potential for rising oil supplies sparked a retreat from recent highs. Light, sweet crude for January 2010 delivery settled $1.54, or 2%, lower at $76.02 a barrel on the New York Mercantile Exchange.

Oil Secretary R.S. Pandey said on 19 November 2009 the government has no immediate plan to raise fuel prices. Pandey said there is no proposal yet on raising fuel prices, adding that state-run oil marketing companies were likely to suffer a revenue loss of Rs 44,000 crore in the current financial year by selling fuel at government-set rates. Pandey said inter-ministerial consultations about raising the prices of gas sold under the administrative price mechanism were underway

Rate sensitive realty shares reversed early gains as the RBI, late last month, raised the provisioning requirements for loans to commercial real estate from 0.4% to 1% at a regular monetary policy review. Indiabulls Real Estate, DLF, Omaxe, Sobha Developers, fell by between 0.82% to 5%.

Unitech fell 2% on equity dilution worries following reports the company has sought approval from the Department of Industrial Policy and Planning and the Reserve Bank of India to raise $700 million through foreign currency convertible bonds.

The latest RBI move will result in increase in borrowing costs for realty firms which depend heavily on borrowing. In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets (NPAs), the central bank said in its quarterly policy review.

Meanwhile, the government reportedly is considering a proposal to do away with the three-year lock-in stipulation for repatriation of foreign investments in real estate projects, in a move to ease foreign direct investment norms in the real estate sector.

Bank shares rose on hopes for financial sector reforms. India's largest bank by net profit State Bank of India (SBI) rose 0.79%. State Bank of India said on 9 November 2009 said it had entered into an agreement with T. Rowe Price to sell a 6.5% holding each in UTI Asset Management Company and UTI Trustee Company. State Bank currently holds 25% in each of the companies and after the sale its holding would be reduced to 18.5%, it said in a statement.

SBI announced on 6 November 2009 it has revised downwards interest rates on deposits by 25-50 basis points for a few maturities effective from 9 November 2009.

India's second largest private sector bank by net profit HDFC Bank rose 1.46% even as its ADR fell 1.04% on Tuesday.

But, India's largest private sector bank by net profit ICICI Bank fell 0.68% as its ADR fell 2.67% on Tuesday. The bank said on Saturday 20 November 2009 it raised $750 million (about Rs 3,500 crore) through an overseas bond issue, at an yield of 5.5%.

India's largest dedicated home loan lender Housing Development Finance Corporation (HDFC) fell 0.19%. The lender announced on 13 November 2009 it has agreed to acquire approximately 41% in the fully diluted equity share capital of Credila Financial Services from DSP Merrill Lynch Capital.

Prime Minister Manmohan Singh said on 8 November 2009, financial reforms, such as building up a domestic bond market and expanding foreign investment in sectors like insurance, would be pushed forward.

Banks need to buffer their capital base and upgrade risk management systems, the Reserve Bank of India (RBI) governor D Subbarao said on Wednesday. Deputy Governor Usha Thorat said on Monday 16 November 2009 the central bank will soon issue guidelines on provisioning for bad loans by banks

Banks and co-operatives have reportedly disbursed farm loans to the tune of Rs 1.38 lakh crore in the first half of 2009-10, meeting over 42% of the target set by the government for the whole financial year.

A deputy governor of the Reserve Bank of India A C Chakraborty said on Wednesday that the time has not come yet for consolidation of banks.

FMCG stocks rose on bargain hunting. ITC, Hindustan Unilever, Marico, and Nestle India rose by between 0.08% to 1.93%.

Metal stocks gained on strong domestic demand. Hindustan Zinc and Sterlite Industries rose by between 0.35% to 0.97%.

India's largest aluminum maker by sales Hindalco Industries rose 0.1% after the company on Tuesday raised about Rs 2900 crore through private placement of shares to qualified buyers to part-finance its expansion projects.

But, Steel Authority of India (Sail) fell 0.1%. The government said on 19 November 2009 it is considering a 20% stake sale in steel major Sail, proceeds of which would partly fund the company's Rs 70000 crore expansion projects.

India's largest steel maker by sales Tata Steel rose 0.86%. The company recently said it issued $ 546.9 million in new convertible bonds in exchange for $ 493 million of securities as part of a plan to reduce costs and ease repayment obligations. The company had said earlier this month the new foreign currency convertible bonds will have a yield-to-maturity of 4.5% and will mature in November 2014.

Demand for steel remains strong from auto, rural construction and infrastructure sectors. Also demand for construction grade steel has improved post monsoon season, and has resulted into higher sales.

Rate sensitive auto stocks were mixed. Low interest rates and attractive benefits offered by companies pushed up auto sales in October 2009.

India's largest small car marker by sales Maruti Suzuki India rose 1.34% on reports the company will spend Rs 2000 crore to expand production capacity at its Manesar factory in Haryana. The company's total sales grew 32.4% to 85415 units in October 2009, compared with 64490 units posted in the same month a year ago.

India's largest bike marker by sales Hero Honda Motors rose 2.24%. The company reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year.

India's second largest bike marker by sales Bajaj Auto rose 2.2%. Carlos Ghosn, chief executive of French car maker Renault and Japan's Nissan Motor Co, said, recently that an agreement had been signed with Bajaj Auto for a low-cost car which would come to India in 2012.

But, India's largest tractor maker by sales Mahindra & Mahindra fell 0.73%. The defence systems unit of India's top vehicle maker M&M will bid for domestic defence projects worth $ 3.5 billion over the next seven years, Khutub A. Hai, head of Mahindra Defence Systems said on Monday. M&M's overall sales climbed 32% in October this year to 18,410 units against 13,935 units in the same month last year.

India's largest commercial vehicle maker by sales Tata Motors fell 0.9%. Tata Motors is reportedly looking at buying private equity firm Actis' stake in truck and bus maker Swaraj Mazda. UK-based Actis, which owns 7.74% in Swaraj and another 9.28% through its unit CDC, is considering exit options, report said.

Jaguar Land Rover received as much as 170 million pounds ($286 million) as a five-year working capital facility from General Electric Co.'s GE Capital division, the lender said on 16 November 2009. Tata Motors the owner of Jaguar Land Rover, is hopeful of turning around the unprofitable luxury unit as it cuts costs to battle a slump in sales during the global recession.

Car sales in India rose an annual 34% to 132,615 units in October 2009, boosted by festival demand and easier availability of loans, an industry body said on Wednesday 11 November 2009. Sales of trucks and buses, a gauge of economic activity, rose 52% to 42,562 units in October 2009, the data showed.

Power equipment maker Bharat Heavy Electricals rose 0.96% after company said on Tuesday it had got an order worth Rs 5600 crore ($1.2 billion) to build a 1,980 megawatts thermal power plant in north India.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.13%. The company on 17 November 2009 said Gilbarco Inc. has bought its petroleum dispensing pump business. ABB, Praj Industries, Siemens, BEML rose by between 0.07% to 2.57%.

Telecom stocks fell as the price war intensified after Tata Teleservices extended its per-second billing scheme to roaming calls recently. The ongoing price war has hit profitability of mobile operators.

India's largest mobile telecom services provider by sales Bharti Airtel fell 0.32%. The company reduced roaming rates by up to 60% on 20 November 2009. Bharti Airtel has slipped to third position in terms of monthly additions, data from an industry body showed. Bharti Airtel in October 2009 added about 27 lakh new users, lower than 29 lakh added by Vodafone Essar and over 38 lakh added by Tata Teleservices.

Bharti expects the current state of stiff competition to continue into 2010, as the government worked on new rules that may allow faster consolidation.

Among other telecom stocks, Reliance Communications, Idea Cellular and Spice Communications fell by between 0.71% to 3.31%.

UltraTech Cement, a unit of conglomerate Aditya Birla Group rose 1.16%. The company absorbed sister unit Samruddhi Cement, to form the country's biggest cement firm. The move, flagged in October 2009, was approved by the boards of both companies on Sunday. In October, the group said it will hive off the cement business of flagship firm Grasim Industries into unit Samruddhi in a cashless transaction and later merge it with group firm UltraTech. Samruddhi shareholders will receive four shares of UltraTech for every seven held in Samruddhi. UltraTech will also issue 14.95 crore new shares, boosting its capital to Rs 274 crore.

Among other cement stocks, ACC, Birla Corporation and Ambuja Cements rose by between 1.29% to 3%.

India's largest thermal power generator by sales National Thermal Power Corporation (NTPC) fell 0.62%. The government has invited proposals from merchant bankers to manage the government's proposed 5% stake sale in leading utility NTPC, which could fetch about $1.9 billion at current market prices.

The proposals must be made by 3 December 2009, the government said in newspaper advertisement. The invitation is also for a 10% stake sale in unlisted state power producer Satluj Jal Vidyut Nigam.

Among other power stocks, Reliance Power, Tata Power Company, CESC, Reliance Infrstructure fell by between 0.02% to 0.76%.

Wipro, India's third-largest software services exporter by sales rose was flat. Suresh Vaswani, joint CEO of the company's IT business said today the company will be able to sustain its operating margins in the near term as the business environment improves.

Infosys Technologies India's No. 2 software exporter by sales rose 0.33% after Chief Financial Officer V. Balakrishnan said today that the company is focused on small acquisitions to boost growth and does not expect pricing to improve in the near term. Pricing will likely remain stable until demand increases, he said.

Sugar shares rose on reports sugar mills in Uttar Pradesh have offered higher prices to growers, raising hopes that protesting farmers would start selling cane. Bajaj Hindustan, Balrampur Chini Mills, Shree Renuka Sugars rose by between 1.2% to 4.53%. Stormy protests by farmers had disrupted parliament last week and delayed cane crushing in the the state, which can further squeeze supplies in the world's biggest consumer of the sweetener.

Cals Refineries clocked the highest volume of 4.55 crore shares on BSE. Mahindra Satyam (3.36 crore shares), Astec Lifescience (1.22 crore shares), Suzlon Energy (0.88 crore shares) and Unitech (0.8 crore shares) were the other volume toppers in that order.

Mahindra Satyam clocked highest turnover of Rs 304.50 crore on BSE. Reliance Industries (Rs 290.23 crore), Housing Development & Infrastructure (Rs 126.24 crore), JSW Steel (Rs 110.70 crore) and State Bank of India (Rs 106.61 crore) were the other turnover toppers in that order.